Why Our Online Store Profits Are Only Up 41% Year Over Year

Happy New Year! My wife just closed the books on another year of business and we are proud to announce that we have achieved double digit growth yet again. The profits for our business increased by 41% and we’re really happy with our accomplishments despite the down economy.

Most people consider 41% a pretty good increase in business so why the “only” in the title? The reason is because our profits could’ve been much much higher had certain fortunate and unfortunate events not transpired during the latter half of the year.

If you recall, I posted a mid year update back in July and profits were up 75% at that point in time. Since our sales are usually heavily weighted towards the holiday season at the end of the year, we initially projected our profit numbers to be a lot higher than they were.

Before I go into detail about why our profits sagged towards the end of the year, let’s go over some of the highlights first.

Year over year profit growth was 41%. There are three main reasons for this increase. One, we introduced many more high margin personalized items to our product mix. Two, we raised prices on some of our most popular goods. And three, we simply sold more product

Year over year revenue growth was 38%

The traffic to our online store increased by 66%. This boost in traffic was largely attributed to many of our content pages getting indexed on the front page of Google.

The organic conversion rate increased by roughly 7%

Our margins increased by roughly 3%

All said, it was a pretty good year but it definitely could’ve been better. Now let’s talk about why the second half of the year wasn’t so hot.

We Had A Family Emergency

My father passed away in late July, so my wife and I had to close up the store for about a month and a half to fly back east. Even though we were closed, we still accepted orders but order volume dropped considerably as expected.

There were very few customers willing to wait a month and a half before receiving their products in the mail.

It’s unfortunate, but the reality is that our business is still largely dependent on my wife and I. We have a few people that we pay to help us pack and ship product but there’s no way that they could have run our business by themselves.

In any case, the latter half of July and August were pretty bad. We basically pulled in only a small fraction of our usual revenues.

Our Second Child Was Born

December is usually one of the busiest months of the year for our business. Christmas and other holiday shoppers stock up on our personalized items as gifts and many event planners purchase large quantities of our linen napkins for holiday parties.

Our son was supposed to be born on December 8th, so my wife and I decided to play it safe and shut down the store starting in the beginning of December.

We closed up shop a bit early because we wanted to avoid going into labor with a bunch of pending orders in the queue that needed to be shipped.

Initially, my wife and I thought that we could reopen our store as soon as our second child was born but this turned out to be the most ridiculous assumption ever.

I must admit that I completely forgot what it was like to take care of a newborn child. I forgot about the sleepless nights, the endless crying and fussiness, the headaches and the general lack of rest.

Basically, my wife and I were walking zombies from day to day and there was no way in hell we could run the store in our current mental state.

In addition, MyWifeQuitHerJob.com began to suffer as well. It’s hard enough to write as it is but when you throw in 3 hours of sleep a night into the equation, it’s downright impossible.

We Had To Move Into Our New House

To make things even worse, we also purchased a brand new house which was destined to close escrow on December 10th. It would’ve been all fine and good if the house was move in ready, but we wanted to make a few changes to the house which meant that I had to manage and deal with contractors shortly after Kyle was born.

In addition, my wife and I had to also worry about packing our possessions in preparation for the move.

Thank goodness my mom flew over in order to help us out. If she wasn’t around, my wife and I probably would have died of exhaustion.

In any case, the birth of our child coupled with the new house caused our store to be closed for practically the entire month of December, our most profitable month of the year.

You take away 2.5 months of revenue including one of our busiest months of the year and we were really lucky to scrape by with a 41% year over year increase in profit.

This coming year, my wife and I hope to make our online store more autonomous. If we can manage to find someone responsible enough to run our store in our absence, we can avoid having these prolonged shutdowns. Here’s to a profitable new year!

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12 thoughts on “Why Our Online Store Profits Are Only Up 41% Year Over Year”

Thanks for sharing. Have you tried outsourcing more of your work, a la 4 hour work-week? It seems like deja vu, but that’s great that your margins increased. (I think I said that last year! How time flies when you’re having fun…)

I am sorry about your father. Congratulations on Kyle! I think you must be very happy! Like you, I plan to have one daughter and one son. And, like you, by the time they are old enough to know what is going on, I will have the financial resources so that we will never need to worry about money. That’s why I love to read your blog. It is so inspirational!

And, by the way, thanks again for taking the time to listen to my presentation for the Infinite Money Machine. That was so nice of you to make time for me!

I wonder if the economy had an effect on your sales as well. Do you products sell better in good economic times? I can see how the economy would have an affect, as people have more money to spend on linens and stuff. But, at the same time, less money means people are motivated to find better ways of shopping, like your store.

Considering the adverse and infrequent happenings last year, your profits should be way up this year! I guess at least 100%. It is exciting to see what happens! Thanks for sharing all the details with us!

Hey George
Thanks for supporting the blog. it was my pleasure to hear your presentation. Did you ever get funding BTW? It’s really hard to tell whether the economy affected our business or not because we are still growing. I hope you are correct in that profits will be up 100% for 2010. Take care and keep me posted on your Infinite Money Machine!

Steve,
I love nerdish number crunching! It’s refreshing to see you take a look at the numbers, extract the information that is important to you and to analyze it and come up with interpretations. I believe this to be a very important process to do periodically.
Congratulations on sales being up and here’s to steady improvement in 2010.

Hey Tyler,
If you consider these numbers nerdish number crunching, you should check out my wife’s spreadsheet. She has numbers for every product we sell along with projections and trends. Thanks for the kind words and here’s to a great 2010 for the both of us!

I am 26 years old and i really want to get into this business and am very enthusiastic but i need some pointers…. I did some research but i feel that you would have the best advice…. if you could email me so that i can use you as a mentor and hopefully become successful with your help!!!!